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Annual report 2010/11www.burberry.com

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2010/1

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www.burberry.com

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burberryAn iconic british luxury brand established in 1856 leverages its rich heritage, proven strategies and talented team to assure sustainable, profitable growth on a global scale

Contents

4 Financial highlights

8 Chairmans letter

12 Chief Executive Officers letter

18 Executive team

22 Burberry Group overview

28 Strategy

44 Business and financial review

54 Risk

58 Corporate responsibility

66 Board of Directors

68 Directors Report

71 Corporate governance

76 Directors Remuneration Report

86 Statement of directors responsibilities

87 Independent auditors report to the members of Burberry Group plc

88 Group income statement

89 Group statement of comprehensive income

90 Group balance sheet

91 Group statement of changes in equity

92 Group statement of cash flows

93 Notes to the financial statements

133 Five year summary

135 Independent auditors report to the members of Burberry Group plc

136 Company balance sheet

137 Notes to the Company financial statements

141 Shareholder information

143 Executive team

4

FINANCIAL HIGHLIGHTS

DELIVERING RECORD PROFITS

1,501mTotal revenue (Year to March)

0 1501

1,501

850995

1,202

1,1851,280

11

07080910*10

962mRetail revenue (Year to March)

0 962

962

410484630

710749

11

07

08

09

10*

10

441mWholesale revenue (Year to March)

0 489

441

354426489

377434

11

07080910*10

Revenue by channel in 2010/11

Retail 64%Wholesale 29%Licensing 7%

5

301.1mAdjusted operating profit (Year to March)

0.000000 301.100006

301.1

185.1206.2180.8219.9219.9

11

07080910*10

Adjusted operating profit is stated before exceptional itemsReported operating profit 302.1m (2010: 216.5m)

297.9mNet cash/(debt) (As at 31 March 2011)

0.000000 297.899994

11

07080910

297.9

(2.8)(64.2)

262.07.6

48.9pAdjusted diluted earnings per share (Year to March)

0.000000 48.900002

48.9

29.131.630.2

35.135.1

11

07080910*10

Adjusted diluted EPS is stated before exceptional itemsReported diluted EPS 46.9p (2010: 18.4p)

20.0pDividend per share (Year to March)

0 20

20.0

10.512.0

14.012.0

11

07080910

2007-2009 and 2010* include the results of the discontinued Spanish operations. 2010 has been represented to exclude the discontinued Spanish operations.

8

CHAIRMANS LETTER

growth on this scale would not have been possible. In financial terms, disciplined execution of these strategies over the five year period has resulted in Burberrys 102% revenue growth and 82% increase in operating profit, with core retail/wholesale operating profit increasing 128% on a 112% revenue gain. This notwithstanding a financial crisis in mid-course.

The five year financial profile is capped by the record 2010/11 performance. Total revenue grew 27% to 1,501m, a 24% gain at constant exchange rates. Operating profit increased 37% to 301.1m, achieving an historical high 15.6% retail/wholesale operating margin. Diluted EPS reached 48.9p, a 39% gain. After-tax return on capital, at 35%, remained strong. All of these figures are on an adjusted basis, and exclude the impact of the now discontinued legacy business in Spain. The Group ended the year with a 298m net cash balance. The Board has recommended a 43% increase in the full year dividend to 20.0p.

Looking ahead. While on a secular basis, underlying trends contributing to luxury growth wealth creation, rise of growth market consumers, continuing consumer interest appear favourable, the global macro environment suggests some reserve.

Although Burberry was among the leading performers in the sector during 2010/11, a strong rebound in luxury spending on the heels of recession lifted most participants. Despite some healthy headline forecasts, the current climate includes distinct uncertainties record fiscal deficits in advanced economies, rising inflation in high growth economies and record commodity prices for all. Political tensions in sensitive areas of the world also present potential challenges. In short, the macro backdrop may not be as favourable in 2011/12.

Near-term factors aside, the Boards optimism for Burberrys future remains in full. The Group possesses a clear and well executed strategy, world-class management and design teams and a strong financial profile, further enabled by a powerful culture capable of executing under a range of market conditions. And the brand operates in attractive markets with specific opportunities across the spectrum. Burberrys results for the year and across this volatile five year period clearly demonstrate these qualities. On behalf of the Board and shareholders, I thank the team around the world for their contributions to these excellent results, and look forward to Burberrys further progress.

John Peace, Chairman

An historic year for Burberry record revenue, margin and profit. These results reflect not only the most recent years effort, but five years of endeavour by this team.

The five key strategies, outlined further in this report, have been executed with lasting effect on the business and business model. In terms of status, the Burberry brand has clearly solidified its unique democratic positioning within the luxury arena. Retail, the channel which maximises the brands ability to manage consumer perception, has become the primary route of distribution, moving from 43% of total revenue in 2005/06 to 64% in 2010/11 (greater adjusting for full China integration) while licensing activities have been largely confined to three global categories and Japan, with the foundation set for future integration of the brands business in that market. Burberry has also gained share across geographies, in both developed markets such as the US and high growth economies like the Middle East. Work in Asia, most recently the acquisition of the brands store network in China, has positioned Burberry well in this high growth luxury region. In line with the strategy, attractive non-apparel categories have been intensified, accounting for 40% of retail/wholesale revenue in 2010/11 relative to 29% in 2005/06. Lastly, through a range of initiatives, including development of an integrated supply chain and SAP implementation throughout the majority of the business, operational capability has been upgraded substantially. Without this investment in infrastructure and expertise,

9

12

Chief executive officers letter

At the most fundamental level, managements primary objectives are the continued development of the Burberry brand and delivering sustained, profitable growth over the long term. These objectives are addressed through a precise vision for the Group, a consistent strategy and a distinctive set of values. Although the global recession of 2008-2009 slowed progress in some respects, we did not compromise pursuit of either objective. With an improving external environment in 2010/11, the team capitalised on the expertise and infrastructure developed during preceding years and the Groups strong financial position to accelerate investment in the brand and reassert the strategic growth agenda.

Brand InvestmentWe have long held that great brands project a pure, consistent experience across all channels in order to standout in todays cluttered consumer arena. Sharp definition communicates the point of difference and informs consumer choice, while also conveying authenticity and integrity, which are vitally important to a heritage brand such as Burberry. A pure brand image captures mindshare.

Further, globally pervasive digital technology is altering consumers relationships with brands both expectations of, and ways of interacting with, them. Digitals capabilities of movement, sound, information capacity and self-navigation allow for an all-encompassing emotive brand experience, which can be achieved anywhere not confined to a brands physical environment, such as a retail store. The technology has raised consumers expectations for a voice in, and greater access to, the brand. Consumers also increasingly expect transparency and clarity with respect to the company behind the brand.

Burberry World launch. In line with these principles, the Group launched Burberry World a website providing the complete expression of the Burberry brand, as well as full e-commerce capability in the final quarter of 2010/11. Burberry World offers access to the brands defining features, including heritage and archival imagery, behind-the-scenes footage of key events, such as runway shows and photo shoots, philanthropic activity and comprehensive product views and information the site contains the most complete product assortment available for purchase anywhere. Burberry World also connects the broader Burberry community through Burberry Acoustic a site featuring music and videos from emerging British artists and

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artofthetrench.com, our social media site allowing members to explore and share experiences of the iconic trench coat. Beyond simply delivering an on-brand interface online, our goal is to provide the perfect, complete Burberry experience. We are also reorie